Heidmar Inc v. Amonima Ravenrate

United States Court of Appeals,

Fifth Circuit.

No. 97-40709.

HEIDMAR, INC. and Heidenreich Marine, Inc., as agents for
Heidmar, Inc., Plaintiff-Appellant,

ANOMINA RAVENNATE DI ARMAMENTO SP.A. OF RAVENNA and A.R.A.
Anomina Ravennate Di Armamento Sp.A. in personam, and the M/V
Pegasus Erre, Her Hull, Engines, Machinery, Tackle, Apparel,
Furniture, etc., in rem, Defendants-Appellees.

Jan. 15, 1998.

Appeal from the United States District Court for the Southern
District of Texas.

Before JOLLY, DAVIS and BARKSDALE, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Appellants Heidmar, Inc. and Heidenreich Marine, Inc.

(collectively, "Heidmar") appeal an order of the district court

vacating the attachment of a vessel, the M/V Pegasus Erre ("Pegasus

Erre"), owned by appellees Anomina Ravennate Di Armamento Sp.A. of

Ravenna and A.R.A. Anomina Ravennate Di Armamento Sp.A.

(collectively, "Ravennate"). For the reasons set out below, we

conclude that the district court erred in vacating the attachment

and remand for further proceedings.

Heidmar is a Liberian corporation with a principal place of

business in Greenwich, Connecticut. Heidmar provides ocean

transportation services, primarily transporting oil products for

petroleum companies. Heidmar does not own any vessels; rather, it

charters them as needed from other entities. Ravennate is an

1
Italian corporate entity with a principal place of business in

Ravenna, Italy and the owner of the Pegasus Erre, an oil tanker.

In May 1995, Heidmar negotiated a time charter party with

Ravennate for the Pegasus Erre. Among other things, the charter

party required that the vessel be oil-tight, fit to carry crude

petroleum and its products, and in good order and condition. The

charter party also required Ravennate to have the vessel inspected

and approved by various oil companies during the life of the

charter party. The charter party provided that its terms would "be

construed and the relations between the parties determined in

accordance with the laws of England," and that either party could

elect to have any dispute arbitrated by a single arbitrator in

London.

The Pegasus Erre was delivered to Heidmar in November 1995.

In October 1996, however, Heidmar returned the Pegasus Erre to

Ravennate, complaining that the vessel was unfit and had not met

the terms of the charter party. Ravennate denied that it had

breached the charter party, and countered that rather Heidmar had

breached the charter party by returning the vessel before its

expiration. Unable to resolve their dispute, the parties commenced

arbitration proceedings in London. That arbitration is still

pending.

On March 7, 1997, Heidmar filed suit against the Pegasus Erre,

in rem, and against Ravennate, in personam, in the Southern

District of Texas. Heidmar sought a judgment against Ravennate and

the Pegasus Erre, as well as the arrest of the vessel pursuant to

2
Rule C of the Supplemental Rules for Certain Admiralty and Maritime

Claims.1

Heidmar filed its complaint at approximately 3:45 p.m. CST.2

Its complaint was accompanied by a motion for an expedited hearing

on its request for the arrest of the Pegasus Erre. Heidmar's

counsel was advised that he should await the arrival of a

magistrate judge who would conduct an ex parte hearing that

afternoon. Meanwhile, at approximately 4:00 p.m. CST, Ravennate

faxed a notification that it had appointed an agent for service of

process in the Southern District of Texas to Heidmar's headquarters

in Connecticut.3

At approximately 4:45 p.m. CST, a magistrate judge held a

hearing on Heidmar's request for the arrest of the Pegasus Erre.

Neither she nor Heidmar's counsel were aware of Ravennate's

appointment of an agent for service of process. The magistrate

judge granted Heidmar's request and issued a warrant for the arrest

1
Rule C provides that an action in rem may be brought: (a) to
enforce any maritime lien; or (b) whenever a statute of the United
States provides for a maritime action in rem or a proceeding
analogous thereto. Fed.R.Civ.P.Supp.R. C(1)(a), (b). If the court
finds that the conditions for an action in rem appear to exist, it
will issue an order authorizing a warrant for the arrest of the
vessel or other property that is the subject of the action.
Fed.R.Civ.P.Supp.R. C(3).
2
Heidmar's filing fee receipt is time-stamped 3:48:41 p.m.
CST. Although Ravennate suggests that Heidmar's complaint was not
filed until it was presented to a magistrate judge at approximately
4:45 p.m. CST, it is mistaken. See Fed.R.Civ.P. 5(e) ("The filing
of papers with the court as required by these rules shall be made
by filing them with the clerk of court....").
3
Ravennate's fax transmittal sheet is time-stamped 4:05 CST.

3
of the Pegasus Erre. The vessel arrived in Corpus Christi, Texas

on March 9, and was arrested the following day.

On March 12, the Pegasus Erre filed a motion to vacate the

arrest on the ground that English law, which governs the charter

party, does not provide for a maritime lien for breach of a charter

party.4 At a hearing that day, the magistrate judge denied its

motion.

A few days later, the magistrate judge issued an order setting

the amount of security for the release of the Pegasus Erre at

$839,078 plus interest. Ravennate subsequently posted a bond in

that amount and the Pegasus Erre was released.

After the magistrate judge denied the Pegasus Erre's motion to

vacate the arrest, Ravennate and the Pegasus Erre filed a motion to

dismiss which the district court converted into a motion for

summary judgment. On May 15, 1997, the court ruled that Heidmar

could not proceed against the Pegasus Erre in rem under Rule C

because English law does not provide for a maritime lien for breach

of a charter party. The court, however, temporarily converted the

arrest of the vessel into an attachment under Rule B of the

Supplemental Rules for Certain Admiralty and Maritime Claims

pending further briefing on the issue of whether Ravennate could be

"found within the district" for purposes of Rule B.5

4
To reiterate, the charter party provided that its terms would
"be construed and the relations between the parties determined in
accordance with the laws of England."
5
Rule B provides, in relevant part: "With respect to any
admiralty or maritime claim in personam a verified complaint may
contain a prayer for process to attach the defendant's goods and

4
On June 19, 1997, the court ruled that Ravennate could be

found within the district for purposes of Rule B and issued an

order vacating the attachment. The court also ruled that Ravennate

had not waived its objection to arrest of the Pegasus Erre, as

Heidmar had argued, and ordered the release of the bond. The court

stayed further proceedings in the case pending the outcome of the

London arbitration.

Heidmar now appeals the court's order vacating the attachment.

II.

As a preliminary matter, we must address Ravennate's

contention that we lack jurisdiction over this interlocutory

appeal. Generally, we may only hear appeals from final orders

unless the district court has certified an order for appeal. See

28 U.S.C. §§ 1291, 1292(b). Heidmar contends, however, that the

district court's order is a collateral order appealable under Cohen

v. Beneficial Indus. Loan Corp., 337 U.S. 541, 69 S.Ct. 1221, 93

L.Ed. 1528 (1949). In Cohen, the United States Supreme Court

recognized an exception to the final judgment rule for orders that

"fall in that small class which finally determine claims of right

separable from, and collateral to, rights asserted in the action,

too important to be denied review and too independent of the cause

itself to require that appellate consideration be deferred until

the whole case is adjudicated." 337 U.S. at 546, 69 S.Ct. at 1225-

26.

chattels ... if the defendant cannot be found within the district."
Fed.R.Civ.P.Supp.R. B(1).

5
In Swift & Co. Packers v. Compania Colombiana Del Caribe,

S.A., 339 U.S. 684, 70 S.Ct. 861, 94 L.Ed. 1206 (1950), the Supreme

Court held that an order vacating attachment was appealable under

Cohen because "[a]ppellate review of the order ... at a later date

would be an empty rite after the vessel had been released and the

restoration of the attachment only theoretically possible." Id. at

689, 70 S.Ct. at 865. We find Swift & Co. controlling and

therefore conclude that we have jurisdiction over this appeal.

III.

The initial question presented in this appeal is one of

timing: in order for a defendant to be "found within the district"

for purposes of Rule B, must the defendant be present in the

district at the time the complaint is filed, or may the defendant

appear some time thereafter? Ravennate argues that a defendant can

be found within the district if it is present at the time of

seizure. Heidmar, on the other hand, argues that a defendant

cannot be found within the district if it is not present at the

time the plaintiff files its complaint.

Heidmar relies on LaBanca v. Ostermunchner, 664 F.2d 65 (5th

Cir.1981). In determining whether attachment was appropriate under

Rule B in that case, we stated: "The issue before us now is

whether the [defendants] could be found within the Middle District

of Florida at the time appellant filed this action." Id. at 67

(emphasis added). Although Ravennate correctly observes that we

did not squarely address the issue of whether the defendant must be

6
present at the time the complaint is filed or at some other time,

we conclude that in LaBanca we correctly looked for presence at the

time the complaint was filed.

First, the text of Rule B itself indicates that, at the very

least, courts do not look for presence at the time of attachment.

Rule B provides that a party seeking attachment must submit along

with its complaint an affidavit signed by the party or its attorney

that, to the best of the affiant's knowledge or belief, the

defendant cannot be found within the district. Fed.R.Civ.P.Supp.R.

B(1). Rule B further provides that if the court upon review of the

complaint and the affidavit finds that the conditions set forth in

the rule appear to exist, the court shall authorize attachment.

Id. Thus, it is apparent that the determination of whether the

defendant can be found within the district must be made before

attachment is ordered.

Second, we recognize that attachment serves two purposes: 1)

securing the defendant's appearance and 2) assuring satisfaction in

case the plaintiff's suit is successful. See Swift & Co. Packers

v. Compania Colombiana Del Caribe, S.A., 339 U.S. 684, 693, 70

S.Ct. 861, 867, 94 L.Ed. 1206 (1950). Thus, the appearance of the

defendant before seizure is effected does not entirely vitiate the

justification for attachment. As the Supreme Court has observed,

"an attachment is not dissolved by the subsequent appearance of

respondent." Id.

Third, we believe that a time-of-filing rule furthers the

interests of fairness and judicial economy. Testing for presence

7
after the complaint has been filed would permit a defendant to wait

until a plaintiff files a complaint and then appoint an agent for

service of process for the sole purpose of defeating attachment.

By the time the defendant appears, the court may have devoted

substantial time and energy to the consideration of the plaintiff's

complaint.

Finally, the only other circuit court that has dealt with the

issue before us affirmed an order of attachment because the

defendant was not within the district at the time attachment was

sought and granted. See Navieros Inter-Americanos, S.A. v. M/V

Vasilia Express, 120 F.3d 304, 314-15 (1st Cir.1997) (observing

that to hold otherwise would allow "a defendant who was otherwise

safely outside the service power of the district court [to]

effectively avoid Rule B attachment by waiting until after the

plaintiff filed a Rule B motion to designate an agent for

service").

Accordingly, we hold that a defendant cannot be found within

the district for purposes of Rule B if it is not present in the

district at the time the complaint is filed. A defendant is

present in the district if 1) the defendant can be found within the

district in terms of jurisdiction, and 2) the defendant can be

found within the district for service of process. LaBanca v.

Ostermunchner, 664 F.2d 65, 67 (5th Cir.1981).

In this case, the record reflects that Ravennate could not be

found within the Southern District of Texas for service of process

at the time Heidmar filed its complaint. Heidmar filed its

8
complaint on March 7, 1997 at approximately 3:45 p.m. CST. There

is no evidence that Ravennate appointed an agent for service of

process in the Southern District of Texas any earlier than

approximately 4:00 p.m. CST that day. We conclude therefore that

Ravennate could not be found within the district for purposes of

Rule B and that the district court erred in reaching a contrary

conclusion.

We must next consider Ravennate's alternative argument that

attachment is nevertheless inappropriate because Ravennate was

present in the district at the time the district court converted

the Rule C arrest into a Rule B attachment. Heidmar argues that we

must reject this argument in light of Sembawang Shipyard, Ltd. v.

Charger, Inc., 955 F.2d 983 (5th Cir.1992). In Sembawang, the

plaintiff sought the arrest of a vessel under Rule C after the

defendant breached a repair contract. The district court issued an

arrest warrant and the vessel was seized. The defendant thereafter

secured the release of the vessel by posting a bond. On appeal, we

concluded that the arrest of the vessel was improper because the

requirements of Rule C had not been met. See id. at 986-89. We

determined, however, that the plaintiff should have proceeded under

Rule B and that its failure to do so was merely a technical

pleading error. See id. at 989. Because the defendant had not

shown that it had been prejudiced by the plaintiff's error, we

allowed the plaintiff to proceed against the bond as if the

plaintiff had originally proceeded under Rule B. See id. In

9
effect, we allowed the conversion of the Rule C arrest to a Rule B

attachment to relate back to the original filing of the complaint.

Heidmar, too, should have proceeded under Rule B, and

Ravennate has not alleged that it has suffered any prejudice from

Heidmar's mistake in seeking arrest under Rule C instead of

attachment under Rule B. Accordingly, we conclude that Heidmar may

proceed as if it had originally brought this action under Rule B.

IV.

For the reasons set out above, we conclude that the district

court erred in vacating the attachment of the Pegasus Erre. We

therefore vacate that portion of its June 19, 1997 order vacating

attachment and remand for further proceedings consistent with this

opinion.

VACATED AND REMANDED.